Hi,
I've contacted multiple agent through TT however this complicated problem is not fully resolved. I hope this forum can shed some light on my case 🙂
Timeline of events:
- 2017: First year me and my wife both contributed $5.5K through Vanguard, into Traditional, then immediately rolled over to Roth. No issue there
- 2018: We mistakenly each put post tax money of $5.5K into Roth directly. Our income level (high) does not allow us to directly contribute. We screwed up.
- 2019: Similar to 2018, screwed up again, this time $6K each.
- In April, 2019, I realized the mistakes we made in 2018/2019, so I called Vanguard. They told me they'd do a recharacterization. Essentially, they moved the 2018/2019 Roth money to Traditional and then did a backdoor conversion into Roth.
- In my 2019 return, I see three1099-R forms from Vanguard.
- From Roth 1099-R: ~$6200 with code N (contribution in 2019, recharacterized in 2019)
- From Roth 1099-R: ~$6100 with code R (contribution in 2018, recharacterized in 2019)
- From Traditional 1099-R: ~$13000 with code 2 (early distribution)
- Apparently the system believes that I contributed more to Traditional than I'm allowed. So I'm taxed again for ~$7000 ($13000 - $6000) at the highest tax bracket (same applies to my wife).
- I funded everything to Vanguard through my checking account which is post-tax already
- It looks like the $13000 is the screwup. It looks like a 2 year contribution lump sum. Did Vanguard make a mistake here by not separating them out?
I tried to input in turbotax in different ways, talking with TT agents, but couldn't sort this issue out. In reality I know the money shouldn't be taxed as my income twice but I just can't sort this out. I may owe some capital gain tax because the money stayed in Roth for a while - that's the cost for this lesson learned.
I know this is a very unique case but I'd appreciate any insights
